New Louisiana law aims to get taxes owed by online shoppers

By MELINDA DESLATTEJanuary 16, 2018

BATON ROUGE, La. (AP) — Online shoppers get ready. Louisiana is beefing up its efforts to collect taxes on purchases made from out-of-state internet retailers.

Residents who bought products last year from online companies that don’t have a physical store in Louisiana — and who didn’t pay state sales taxes on those purchases — will begin receiving notifications this month from the retailers telling them they owe taxes to the state.

The Louisiana Department of Revenue says this is the first year the notice letters, to be mailed by Jan. 31, will be sent to shoppers. But they’ll be an annual occurrence under legislation that was passed in 2016.

“We don’t want people to be surprised when the notices arrive,” said Revenue Secretary Kimberly Robinson.

Louisiana law requires shoppers to pay state sales taxes for online purchases, but many out-of-state retailers don’t charge them. Taxpayers are supposed to report online purchases for which state sales tax wasn’t charged on their income tax returns — and to pay a use tax on them, essentially the sales tax that wasn’t collected at the time of purchase. Few shoppers make those tax payments, however.

States estimate they’ve lost billions in uncollected taxes from online sales, and they have spent years examining ways to capture those lost tax dollars, but their options are limited when the retailers are not based in the state. Internet giant Amazon.com fought for years against collecting sales tax but now does so nationwide, though third-party sellers on its site make their own decisions.

Louisiana’s law was modeled on a Colorado law that was challenged in federal court and upheld, according to Robinson.

The Louisiana law passed in 2016 requires out-of-state internet retailers that make sales delivered to Louisiana addresses to notify shoppers the items are subject to state tax, if the retailers didn’t charge the sales tax.

The notice letters are supposed to include the total amount made in purchases in the prior calendar year, including a breakdown of dates and purchase amounts, along with a “clear statement that Louisiana use tax may be due,” the revenue department says. The letters will arrive in an envelope that is marked in all caps with the words: “Important Tax Document Enclosed.” They also could be sent electronically if the shopper agreed to that in writing.

Retailers also must send annual reports to the revenue department, detailing what Louisiana customers spent with the store in the prior year. The report won’t say what customers bought, but will include total purchase amounts. The revenue department can cross-check the information with tax returns to see if people are paying the taxes owed on items bought online.

Robinson said the agency notified large out-of-state retailers that state law requires the notifications to be sent. The law isn’t aimed at mom-and-pop stores, applying it only to out-of-state internet retailers with gross receipts of more than $50,000.

State financial analysts don’t have an estimate of how much might be collected in tax payments by sending the notification letters.